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Is it possible to release money from pension to buy property?

(26 Posts)
mumhadenough Thu 09-Sep-10 20:50:05

I've seen a cracking little flat that I'd like to buy to let, just don't have the deposit at the mo and can't release equity from our own house as its dropped so much in value. I even have a tenant lined up!

Is it possible to release money from your pension scheme to buy property to let?

Thanks in advance!

Jaybird37 Fri 10-Sep-10 08:09:58

I am not an expert, but I don't think so, because you will have had significant tax relief on it.

WkdSM Fri 10-Sep-10 11:00:31

Far as I know you can invest in commercial property but not residential property.

If you have a reasonable pension pot you might be able to invest in larger property deals - we use a company called Hotbed - and they find investment opportunities and raise funds in tranches of from £25k each to add up to however much needs raising.

There is a risk, obviously, as with any investment.

mumhadenough Fri 10-Sep-10 15:39:14

Thanks for your advice. Huge bummer!

Jaybird37 Fri 10-Sep-10 16:01:00

Think of it this way, you will have got something like 22% return on the money you put into your pension pot, because of tax relief. That is not a return you will see anywhere else.

BigGitDad Sun 12-Sep-10 22:14:11

As said Commercial premises only and that is with a SIPP (Self Invested Personal Pension) not a Personal Pension. Even then you would need a pretty large fund to make it work as you are utilising the 25% lump sum aspect from the pension.
Think about it though, if you wanted to take your pension you would have to sell your house. That might not be possible or desirable.
A couple of years ago it was mentioned that Buy to Lets would be allowed but the Govt went back on it.

CassandraW Mon 13-Sep-10 20:36:55

If your house has "dropped so much in value" why do you want to buy another property?

You have tied all your cash up in a depreciating asset. Have you learnt nothing from that?

Lizcat Tue 14-Sep-10 16:32:20

I use my SIPP to buy commercial property and to get a mortgage you need 50% of the value of the property in your SIPP to be able to get a mortgage. I have ended up as an accidental residential landlord as one of the properties had a flat with it which I had to split the title for and buy the flat myself.
It is also very difficult to even buy commercial property and the legal costs are huge due the additional searches you need and special valuations. The last property took 6 months to buy.

totalflotter Tue 14-Sep-10 20:17:50


Did you see the RICs survey out this morning? Worst one month fall in a long time.

Given that your own house has fallen so much in value, don't you think it would be somewhat reckless to get into BTL at this point? You'd be much safer keeping you're money in the pension.

bacon Tue 21-Sep-10 13:40:26

Put it this way my father in law died, his pension was good just under £100k, by the time the tax came out etc we were left with £40k. There was no way abound this terrible waste. Yes you can transfer pensions but what is your pension worth? Its rubbish over the past couple of years.

Dont forget you have to legally disclose any additional income through rental to the tax man (not sure of figure is it £350+pm?).

I have a friend who owns a rental property and has it on interest only and the figure isnt covering the mortage on it - what sence is that I think she must be dull!

Buy to let isnt as good as it used to be.

Harters Thu 06-Dec-12 15:31:18

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Notmadeofrib Thu 06-Dec-12 18:27:45

£15,000 in fees which seemed a bit steep,but I couldn't find any better deal out there too right that's steep unless you have a very large fund.

Try 3 IFA's at least and ask for a fixed fee.

marbs33 Tue 22-Jan-13 08:52:26

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marbs33 Tue 22-Jan-13 08:53:42

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GooseyLoosey Tue 22-Jan-13 09:06:08

Bacon - if you paid 60% tax on a pension lump sum, I would be querying why. Death benefit lump sums are generally tax free. If it was a payment of pension, it should still generally only be taxed at the individual's marginal rate. I would query what happened.

Mumhadenough - generally speaking, pension funds do not allow you to access the money until retirement. That is the point of them. You can look at transferring funds to a SIPP, but as BigGit Dad said, they only permit investment in commercial property and that is oftern prohibitively expensive.

expatinscotland Tue 22-Jan-13 09:13:56

'A couple of years ago it was mentioned that Buy to Lets would be allowed but the Govt went back on it.'

Thankfully! Too many people using BTLs as investment vehicles rather than seeing them as the essential commodity they are - shelter - is part of the reason why the Government still has to prop up the housing market via artificially low interest rates whilst the rest of us pay for it through inflation and low returns for savers and pensioners.

CogitoErgoSometimes Tue 22-Jan-13 09:36:04

The government doesn't set interest rates. The Bank of England sets them.

expatinscotland Tue 22-Jan-13 14:58:49

I'm sure they both work entirely independent from each other, too, Cognito.

BTL speculation in property is not good for stability in housing markets, hence, the mess we have now.

CogitoErgoSometimes Tue 22-Jan-13 15:05:55

Anyone buying houses at the moment is good news for the property market.

expatinscotland Tue 22-Jan-13 15:41:42

Well, this gal won't be.

Badvoc Sat 26-Jan-13 19:05:48

You can cash in your pension?
Or part of it?

LucyJohns1 Sat 18-May-13 14:51:40

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mrsmalcolmreynolds Thu 23-May-13 22:29:43

badvoc the circumstances in which you can legitimately "cash in" your pension are v limited. Basically 1. If it your pension savings are v small - not more than 18k capital amount 2. once you are 55 or over you can take 25% as cash and can usually arrange for that to be at the same time as or before you take income. What people have mainly been talking about on here is the limited ability to use a self-invested personal pension to invest in property - this means you have not cashed the pension in, instead the pension fund has chosen to invest in property. However as others have said it is not possible to do this with residential property.

There are quite a lot of dodgy scams at the moment sending text messages and the like about releasing cash from your pension - if anyone is tempted, I suggest you check out the Pensions Regulator's website, the section on pensions liberation fraud, first!

DIddled Thu 23-May-13 22:39:25

Please please please stay away from anything / one who is offering cash advance/loan if you transfer your pension. That is all.

DIddled Thu 23-May-13 22:40:39

Bacon echo Gooseys query above- I think you are confused.

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